While rugby union supporters tend to belong to the AB demographic that buys premium Foxtel packages, revenue to the end of the December 2019 quarter fell 11 per cent. Alarmingly, the numbers for Kayo, Foxtel’s streaming service designed to compete with the online behemoths, fell 10 per cent. In summary, the financial results suggest Foxtel still wants rugby but won’t pay a premium.
RA, whose broadcasting rights to the four-nation Super Rugby competition, Test matches between these countries and inbound tours, expire at the end of this season, has been hit by a triple whammy:
- An expectation by RA’s franchises (NSW Waratahs, Queensland Reds, ACT Brumbies and Melbourne Rebels), along with the other Super Rugby nations, of an increase in rights fees.
- No clear bidder for rights, given that Optus is claiming to be interested but not committed, while Foxtel is furious RA rejected its first offer, perceiving it as disrespectful after 25 years of funding.
- TV ratings continuing to decline. SANZAAR games which drew ratings of 180,000 in 2004, now attract only 33,000. More significantly, games between the Australian teams are reportedly down 35 per cent this season.
Raelene Castle, RA’s chief executive, led the expectation of an increase in broadcasting revenue above the $57 million a year in the current deal, hoping to generate competitive tension between Foxtel and Optus, with the latter telco acquiring the rights to the English Premier League from Foxtel in 2016.
However, Optus is not a producer of sport. It acquires sporting properties and telecasts them. Establishing a production arm to dispatch broadcast vans and commentators all over the country would be a huge step – unless it forms a partnership with Channel Ten, which currently screens Wallabies Tests.
Furthermore, Optus (owned by Singtel) has a new chief executive from April. Former Commonwealth Bank executive Kelly Bayer Rosmarin will replace Allen Lew after joining Optus as deputy chief executive only in March last year. Paying big money for an underperforming sport in her first decision as CEO would be another brave step.
The eternal problem of both the “Game They Play in Heaven” and the “Beautiful Game” is the belief that because everyone else in the world loves these codes, so should Australians.
On the eve of the recent Rugby World Cup in Japan, the coach of an Australian Super Rugby franchise scoffed at rugby league’s minor place in the world order, predicting the opening match between Japan and Russia would generate ratings 10 times those of a State of Origin match.
Maybe. But the rest of the world doesn’t usually pay RA’s bills. Admittedly, the boost in the existing five-year deal was the result of a bidding war between two British telecasters for SANZAAR content. However, the winning bidder, Sky Sport, has subsequently cut back its investment.
So, unless Castle and her chief negotiator, Shane Mattiske, can develop competitive tension between Australian bidders, Optus/Foxtel/Ten, RA is in the same trouble as the A-League, which looks set to lose its major sponsor and generates ratings not much better than the TV test pattern.
FFA’s current $346 million, six-year deal was less than the $80 million a year then chairman Frank Lowy expected, but Foxtel chief executive Patrick Delany hinted he overpaid, partly through a sense of responsibility to assist the regeneration of the sport. However, that was back in December 2016, not in May last year when Foxtel announced a $417 million loss and a determination to cut back on “non-marquee sports”.
If Foxtel doesn’t fund the sport, who will? A-League private owners have already lost a combined $350 million over 12 years.
Australia’s four Super Rugby clubs have a different ownership structure. They are owned by the state unions who have limited revenue raising opportunities, unlike AFL and NRL clubs that are owned by members, licensed clubs or wealthy private owners, such as the Rabbitohs’ Russell Crowe and James Packer.
Furthermore, rugby league and Australian rules are led by commissions who exercise control from the elite to the grassroots. NSW and Queensland rugby unions run their own state semi-professional club competitions, the Shute Shield and Hospital Challenge Cup respectively.
Foxtel made a bid to televise both competitions, which would effectively have prevented Castle from going to Optus with a “whole-of-game” sales strategy, but their offer was rejected by the clubs and NSW Rugby Union on Friday.
Some in the News Corporation empire sought to combine the 11 Shute Shield teams with the nine Hospital Challenge Cup teams into two divisions of ten.
This is reminiscent of the initiative by Sydney businessman John Singleton to broker peace in the Super League war by creating two divisions of the 12 ARL teams and the 10 Super League teams.
But that was way back in 1997, reflecting rugby union’s bumbling failure to keep pace with the times.
Roy Masters is a Sports Columnist for The Sydney Morning Herald.